Divorce, Dissolution and Separation Bill – what it means and where it is at now
The Inheritance and Trustees’ Powers Bill (“the Bill”) was introduced into the House of Lords on 30 July 2013. The Bill implements many of the recommendations contained in a report published by the Law Commission on 14 December 2011. The report was produced following a lengthy period of consultation by the Law Commission to review the current law and review options for reform of inheritance law. The Bill is due to receive its second reading on 22 October 2013.
In this blog, we look at key inheritance law issues and proposed changes covered by the Bill and reflect on areas where perhaps more progress had been expected.
When a person dies without leaving a valid Will that deals with the whole or part of their estate they are said to have died “intestate”. The intestacy rules, which are contained in the Administration of Estates Act 1925, govern how the estate should be distributed among the deceased’s surviving family members and descendants.
Family Provision Rules
Under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) claims for reasonable financial provision can be made by certain family members and dependants against the deceased’s estate, regardless of whether the deceased left a valid Will or not.
The Law Commission’s examination of the law in these areas found “many instances where the current law is outdated, confusing, or places unnecessary obstacles in the way of those with a valid claim”. The Bill includes reforms which aim to update the current legal rules to “reflect modern social expectations”. Some of the key reforms are detailed below.
Under current law, where a person dies intestate leaving a surviving spouse (which includes a civil partner), but no children or other descendants, the deceased’s assets are shared between the deceased’s spouse and also the deceased’s parents and/or siblings. The new rules in the Bill will provide that, in the above circumstances, the deceased’s assets will pass to the surviving spouse in all cases, effectively cutting out the parents and siblings of the deceased.
The Bill also simplifies the sharing of assets where the deceased is survived by children or other descendants as well as by a spouse. Under existing law, the surviving spouse receives the deceased’s personal chattels and a statutory legacy of up to £250,000. The spouse also receives a ‘life interest’ in half of the residue, with the deceased’s children or descendants receiving the other half. The life interest means that the property is held on trust and the spouse can use the property or its income until their own death. The rules under the Bill retain the position regarding the chattels and statutory legacy but remove the life interest structure for the surviving spouse; instead they will receive their half of the residuary estate outright.
Adopted Children & Unmarried Fathers
The Bill includes changes which will ensure that children who are adopted after a parent’s death do not lose their entitlement to share in that parent’s estate as a result of the adoption. Also, rules which currently place unmarried fathers at a disadvantage in terms of inheritance where their child dies intestate are to be amended.
Family Provision Claims
Under existing law, a person who was treated by the deceased as a child of the family is permitted to bring a claim for family provision, but only if that treatment was in the context of a marriage or a civil partnership. The Bill will remove this “arbitrary obstacle” to bringing a claim, amending the definition of a child of the family so that it is no longer limited to situations where the deceased was married or in a civil partnership.
The Bill will also now permit a claim for family provision in certain circumstances where the deceased left property and family members or dependants in England and Wales but died domiciled in another country.
Welcome changes in all areas?
Research indicates that up to two thirds of adults do not have a Will, and thousands of people die intestate every year. It is therefore essential that, where there is an intestacy (either partial or whole), the legal rules governing the distribution of an estate should “reflect the needs and expectations of modern families”. The laws on intestacy and family provision have not been comprehensively reviewed for more than 20 years and family life is now vastly different to the ‘typical’ family arrangement when the existing laws were made. This Bill, when enacted, will represent a significant step in updating the current law and bringing it more in line with modern social expectations.
However, there are parts of the Law Commission’s report which the government has declined to adopt. For example, the Law Commission considered how far the law should provide for cohabitants (i.e. unmarried couples) where one partner dies intestate.
The Law Commission recommended reforms that would allow the intestacy rules to apply to the survivor where their cohabiting partner died intestate. The reforms would only apply to unmarried couples who have cohabited for at least five years or, if they have a child or children together, have all been living in the same household for at least two years. The Law Commission suggested that this would “reflect the growing prevalence and public acceptance of cohabitation” and set out the recommendations in the draft Inheritance (Cohabitants) Bill, but the government has confirmed that this will not be implemented during this Parliament.
This will be a disappointing result for many cohabiting unmarried couples. Research suggests that there are over 2 million such couples in the UK and many of them do not realise that they have no automatic right to inherit if one of them dies without leaving a valid Will. It will be interesting to see whether this area of the law will be revisited in the future.
Further details about the Law Commission’s report and the Bill can be found at www.parliament.uk.
Skip to content Home About Us Insights Services Contact Accessibility